NAB board told: clean up, clear off

Major shareholders have stepped up their calls for immediate changes to the highest level of National Australia Bank, demanding that directors first resolve their damaging boardroom stand-off and then quit their positions.

The calls come with the dissident director at the heart of the controversy, Cathy Walter, believed to be reviewing a report by lawyers Blake Dawson Waldron that reaffirmed the independence of an earlier investigation by Pricewaterhouse-Coopers (PwC) into the bank's $360 million foreign exchange losses. It is expected that Mrs Walter will release a fresh statement early this week.

When a two-day board meeting concluded on Friday afternoon, the bank appeared little closer to resolving the split with Mrs Walter, who has resisted a request from her fellow directors to resign. However, the board did appoint a committee, comprised of upper management of their subsidiary banks, to set a date for an extraordinary general meeting where shareholders will vote on her future.

John Murray, of Perennial Investment Partners, told Channel Nine's Business Sunday he agreed there should be wholesale changes at board level, with the exception of new member John Thorn.

"Changes are required quite quickly," he said. "When you look at the composition of the board, and you look at who has contributed in terms of contributing to some major disasters that have befallen the bank over the last few years, it is very difficult to see that any of them are excused."

Corporate governance expert Bill Beerworth, of Beerworth & Partners, said the majority of the board had to go because most were there during the $4 billion write-down on HomeSide two years ago.

"Each of them are excellent in their own way but we need a new board," Mr Beerworth said.

He said chairman Graham Kraehe might also be included in the directors who should leave.

Mr Kraehe "was on the audit committee for a long time, he was chairman of the risk committee for seven months which may not be long but certainly . . . the question has to be raised," Mr Beerworth said.

The audit committee was criticised in the PwC report into unauthorised forex trading for not asking enough probing questions that could have uncovered the scandal.

Paul Frost, of Investors Mutual, said board changes were necessary but a spill of the entire board could create additional instability.

"The issue is who and when [but] what is most important to us is that the composition of this board is strengthened over time," Mr Frost said.